Economic Growth and World Trade

Slowing population growth will help poorer countries develop economically, enhancing their ability to participate in world trade. This can only benefit the U.S. economy, which is the world's largest.

While the influence of population growth on economic development is controversial, the weight of scholarly opinion today supports the view that the poorest countries would be more likely to achieve reasonable growth rates in per capita income if their rates of population growth fell through declines in birth rates.1 The connection between economic and population growth is often confused by a chicken-and-egg dilemma: Economic growth often leads to declines in death rates and increases in immigration, both of which contribute to population growth, so it can sometimes appear that economic and population growth go hand in hand. When the discussion is narrowed to the relationship between birthrates and per capita income change, the negative influence of high fertility on income is more apparent.2 When each generation is similar in size to the one that precedes it, it appears, parents find it easier to prepare their children for productive lives. Governments find it easier to build and maintain transportation infrastructure and provide such social services as universal schooling. These lay the groundwork for investment and economic growth.

It is possible, of course, that rapid population growth may contribute to economic growth at certain times and yet constrain it at others. In societies fortunate enough to begin the development process with small populations and abundant natural resources, rapid population growth may indeed help spur economic development. But in most developing countries today populations are already large relative to the availability of natural resources, and supplies of renewable fresh water and farmland are scarce and often concentrated in a few hands. Under such circumstances, further rapid population growth is especially likely to contribute to soil erosion, declines in water quantity and quality and the partition of farmland into parcels too small to support families. These trends can undermine both subsistence farming and cash crop production and hinder both economic growth and industrial development, which historically have been built upon strong agricultural economies.3

Governments must grapple with the problems of resource scarcity and inequality, while also devoting disproportionate energy and resources to the challenge of educating and providing jobs for ever-growing generations of young people. Lending support to the evolutionary relationship between population and economic growth, a recent review of the evidence suggests that the association between high birth rates and slowed income growth was weak in the 1960s and 1970s but strengthened significantly in the 1980s, especially in the poorest countries.4 In theory, more people may mean a country can produce and consume more goods and services, leading to economic growth. But this can only occur when employment opportunities grow at least as fast as the labor force and when people have access to the necessary education and training. This is a race that many governments are losing. Rapid population growth complicates the task of providing and maintaining the infrastructure, education and health care needed by modern economies.

"The balance of present scholarly judgment," writes author Joel E. Cohen, "is that slower population growth would benefit most developing countries, and that rapid population growth exacerbates many other problems of which it is not the sole or principal cause."5 Trade is now a global activity, and much of the future growth of the U.S. economy will depend on the capacity of people in countries around the world to buy U.S. products. Boosting U.S. exports stimulates the growth of jobs that pay, on average, wages that are 13 percent above average.6 Moreover, the most dynamic growth in demand for U.S. export products is occurring in developing countries. The expansion of this demand can be eroded by rapid population growth.